Finance
What is the primary purpose of 'private mortgage insurance' (PMI) from the lender's perspective?
ATo reduce the borrower's monthly payment
BTo protect the lender from loss if the borrower defaults and the collateral value is insufficient✓ Correct
CTo insure the title to the property
DTo cover the borrower's life if they die during the loan term
Explanation
PMI protects the lender — not the borrower — against financial loss if the borrower defaults on a high-LTV loan. The borrower pays the premiums, but the lender (and investors) benefit from the coverage.
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